Performance Pay Structures

/jial14 jon@championsway.com

Goal: To provide simple performance based pay structures you can implement in a school not already using them.

Key Takeaways from this discussion:

1. The Primary Purpose of your staff’s pay structures

2. Choosing how you will measure performance based on your current situation

3. Matching up measurements with $$$.4. Introducing the pay structure to staff5. Making the compensation visible to staff at

all times

1) The Primary Purpose of your staff’s pay structures

What IS the primary purpose?Align the behaviour of your staff, with the goals of your business!

Think about this for a moment!

Question - What does an hourly rate truly suggest?

Answer - For each hour you are here, you will get paid $X.XX for that hour.(There is no clear indication of what should be done during that hour though)

Paying staff based on specific measurements provides a consistent answer to the question:

“What should I work on?”

(One of the most expensive questions)

Time to change to Paying based on measurements.

So, what do we measure?It will depend on

your situation…

2) Choosing how you will measure

Current situations:

You are the closer but have a staff that can assist you.

You have a staff member you would like to be the closer.

You have two staff members, where 1 can close and the other can assist.

What to measure:

Number of visits (“shows”) to the school, and number that closed.

Number of memberships sold (dollar value).

Both.

Before we can make any changes!

• You need to compile a 6 month sample of those stats.

• Next best sample is one low, one medium, and one high month.

• If you don’t have either, it’s dangerous to estimate.

Once you have the stats for Appointment Booking

We Choose between:

Goal Based Pay or

Per/Instance Pay

Goal Based Pay

How it works How it PerformsThe staff member is given targets for number of “shows”, and number of “closes” that occur from the “shows” they create.

You pay a bonus for each target they hit.

You can pay a flat rate per goal, or do tiered goals.

Staff will shoot for the goals always in the beginning of the month.

If numbers aren’t solid by the week 3, giving up can occur without coaching. (Back to going through the motions)

It’s really simple to manage.

Without tiers, web leads in the final part of the month sometimes are not called for a few days.

Example of How Tiers Work for Goal Based Pay

1st TargetInitial Bonus is Paid

2nd TargetHigher bonus is paid

3rd TargetVery Meaningful Bonus is paid

Per/Instance Pay

How it works How it PerformsFor each “show” pay is added to the staff’s monthly total.

For each “show” that closes, pay can also be added (optional).

You can apply tiers or leave it as a flat rate.

The Staff Member will be more engaged consistently. (They’re paid on each one)

Without Tiers, final portion of the month can be held hostage by those that are fine with an average month’s pay. (“Why push it if it’s the same pay and I can set the beginning of next month?”)

A little harder to manage when you incorporate tiers.

How Tiers Work for Per/Instance Pay

Rate 1From Average to point of High Month

Rate 2Begin at point of High Month

Rate 3Begin at pointOf Outstanding Month

Sample Breakdowns for

Tour Booking

Paying on ShowsBelow

AverageAverage Shows +5 +10 +15

Goal Based Pay

Reduce pay by 10%

Same as current

Add $100To current

Add $250 to current

Add $450 to current

Per/Show-$20 for each under, stop

at -$100

Same as current

$20/show $25/show $30/show

Below Average

Average Closed from

Shows+5 +10 +15

Goal Based Same as Current

Same as Current

Add $50 Add $150 Add $300

Per/Close ^ ^ $10/close $15/close $20/close

*Both examples utilize a forgiving approach to lower months

A Little Extra for Shows that Close

Once we have the statsFor Closers

We Choose between:

Goal Based Pay or

Commission Pay

Goal Based for Closers

How it works How it Performs

A planned dollar payout for reaching a predetermined levels of sales.

Ex. $400 bonus if we break $28,000 in contracts sold, and another $400 for every additional $6,000 we are over $30,000.

You can keep it flat, or add tiers.

Staff will start to see the month the same way you do. (“It’s the 8th, and we’ve sold this much so far…”)

If numbers are not solid by half-way in the month, motivation can drop.(“There’s no way we’ll hit that now…”)

It’s really simple to manage.

Without tiers, “sand bagging” can occur.(“We’re good for this month, I’ll save this so starting next month isn’t so hard”)

Example of How Tiers Work for Goal Based Pay

1st TargetInitial Bonus is Paid

2nd TargetHigher bonus is paid

3rd TargetVery Meaningful Bonus is paid

Commission Pay

How it works How it Performs

You pay the staff a % of every dollar sold, or a % of every dollar sold after a certain amount.

%’s range based on how aggressive you want to be.

You can add tiers.

You will need to think long and hard about your approach.

This kind of structure will be familiar to outside hires you get with sales in mind.

Staff will treat every lead more like you would now. ($ on the line at all times).

Tiers add engagement but also add complexity and risk.

It requires more energy to manage.

How Tiers Work for Commission Pay

Rate 1From Average to point of High Month

Rate 2Begin at point of High Month

Rate 3Begin at pointOf Outstanding Month

Sample Breakdowns for

Membership Sale

Sample Membership Sales PayBelow Average

Average +$6,000 +$12,000 +$18,000

Goal Based Reduce Pay by 10%

Same as Current

+$400 +$1000 +$2000

Commission -6% of $ under, stop

at -$180

Same as Current

6% of $ over 8% of $ over 11% of $ over

*Both examples utilize a forgiving approach to lower months

*The Commission example assumes we are paying for only for $ sold above the current average vs. on every dollar, where a larger reduction in current pay would be required, and the structure is harder to implement.

Equipment Sales

- 5% of profit of the pro-shop (1 person)- 5% of sales made by them (group)- Don’t bother with tiers (distracts from core sales)

#4) Introducing it to your staff

Existing Staff New Staff

Inform them of the upcoming change in pay.

Give them 1 month of “whichever more is paid” (increase to 2 if needed)

Complete Transition

Explain training pay and performance pay during hiring process.

Give them 1-2 months on training pay.

Implement performance pay

5) Making the compensation visible to staff at all times

In Your Face BoardAdd to the top:- Total Shows MTD- Shows the Closed

MTD

- Total CV MTD- Total Pro-Shop MTD

Digital Reporting

• Use combination of billing service or software and Spreadsheet on Google Docs (or use PerfectMind)

Questions?Jon@championsway.com

/jial14

PerfectMind Reporting

(Live Product)

Appointment Booking (MAsimple):

- Report = attendances with “create date” equals “this month”, and “status” equals “attended”, group it by the class “organizer” to know who should be credited for each booking.

*requirement: - Must enter classes for each intro booked, and put “intro” or a keyword in the class name each time you enter

one.- You then book the person for the class- If they come, you change them to “attended”

(PM version 1)

- Report = attendances with “create date” equals “this month”, and “status” equals “attended”, “class subject” contains “intro” or keyword, then group it by the intro “owner” to know who should be credited for each booking, and then group by intro status to know how many of each.- Columns would include “lead full name”, intro start time, intro status, intro owner

*Requirement- - Must enter an event with type = intro each time an intro is booked

- book the person for the intro- if they come, change them to attended

Closers

• Sales Report MAsimple:- Report = purchased items “create date” equals “this month”, group by “created by”, then group by purchased item “type”, make sure to have price in columns and check off sum before saving report.

* requirement: sell everything through the shopping cart

Sales Report (PM version 1):- Monthly Contracts by Salesperson report under “Sales Performance” folder- Products sold by Staff report under “Sales Performance” - see criteria and replicate*requirement: use contracts, use store.